Who’s Down With Airbnb?

With listings in more than 190 countries around the world, Airbnb is no longer in startup mode. The peer-to-peer rental company has welcomed more than 40 million guests since its founding in 2008 and expanded its listings from a couple of air mattresses on a floor in San Francisco to more than 1.5 million rooms, apartments, homes, and even castles.

In Airbnb’s most recent efforts to raise private funding, investors indicated that they believe the company is worth a whopping $25.5 billion — more than hotel giants like Marriott and Starwood. As the company continues to add new listings and convert traditional travelers into shared- economy believers, one big question looms over the meetings industry: What does this massive growth mean for the future of room blocks?

One destination marketing organization isn’t waiting for the answer. In July, the San Francisco Travel Association announced a first-of-its-kind marketing partnership with Airbnb. While the partnership is geared primarily toward helping visitors who want to stay in neighborhoods that lack a large hotel supply, according to San Francisco Travel CEO Joe D’Alessandro, it also will connect meeting planners with Airbnb when they are in need of additional lodging options during city-wide conventions and other large events.

“Airbnb is going to be a part of our industry,” D’Alessandro said. “We have a choice of trying to wage an unsuccessful fight against it, or we can try to figure out how to work together.”

REDEFINING SHORT-TERM

Does San Francisco Travel’s new relationship with Airbnb create a conflict for the organization’s hotel partners? “A lot of our hotel partners had concerns because any sort of additional supply in the market is a competition,” D’Alessandro said. “We wanted to make sure that everyone felt comfortable with the relationship.”

To that end, D’Alessandro monitored the city’s legislative debate surrounding short-term rentals. Last October, San Francisco became one of the first cities in the world to make companies like Airbnb legal, passing a law that allows people to rent their rooms or homes for up to 90 days per year. “The discussion among San Francisco’s Board of Supervisors was very important to us as we considered pursuing a relationship with Airbnb,” D’Alessandro said. “We had to make sure the company didn’t have an unfair advantage over our hotels.”

Now that city law requires Airbnb property owners to pay taxes and carry liability insurance, hotel owners and Airbnb owners are working within the same system. “Everyone is following the same rules,” D’Alessandro said. “For someone who chooses to book an Airbnb property, the process is safe, legal, and secure.”

But while the legal details surrounding the booking process might be similar, D’Alessandro notes that staying at an Airbnb property can feel much different for meeting attendees, because it doesn’t fulfill key hotel functions, such as providing a convenient drop-off location for shuttle service or offering a centrally located bar for networking opportunities.“Airbnb and other short-term rental services will never replace core convention hotels,” he said, “because of all the functions that a headquarters property gives you.”

That said, Airbnb listings do provide a valuable service for any destination hosting a large-scale event that places major pressure on its existing hotel supply. For example, when Salesforce brought an estimated 150,000-plus attendees to Dreamforce 2015 in San Francisco this past September, every hotel in the city sold out in advance. “We could either turn people away,” D’Alessandro said, “or find space for more people to be part of the conference.”

Indeed, San Francisco Travel isn’t the only player in the meetings industry to recognize that Airbnb can play a pivotal role in helping attendees who are looking for accommodations. In September, Experient announced that it would help clients include Airbnb as a housing option for attendees. “Right now, we’re finding ourselves in situations where we often need to try to secure additional rooms for our clients,” said Scott Durkin, Experient’s vice president of partner development. “In compressed cities, that can be really difficult. Our approach with Airbnb is to add the option in when we’re experiencing that compression factor. When all the blocks have filled up or it’s difficult to add inventory, these properties can make the difference in the ability to attend or stay home for some attendees.”

But adding Airbnb as an official housing provider doesn’t just give attendees more lodging options. It also can help meeting planners gain a more complete picture of their meetings’ value to a destination. “We’re working with Airbnb on the reporting component so that our clients have the ability to understand where their attendees and exhibitors are staying,” Durkin said. “That’s a crucial component that helps capture the true impact of a convention on a city and provides additional leverage in future negotiations.”

STAYING COMPETITIVE

While San Francisco Travel and Experient both have embraced a forward-thinking approach, Airbnb has a long way to go before it becomes a major player in convention housing. Santa Monica, California, recently banned short-term rentals for less than 30 days, while members of the New York City Council have proposed fines of $10,000 for homeowners who illegally rent their properties.

But while local lawmakers are working to determine how to effectively regulate short-term rentals, the global verdict is clear. People love Airbnb. Inc. named it Company of the Year in 2014. President Obama appointed company co-founder Brian Chesky as a Presidential Ambassador for Global Entrepreneurship. By 2020, The Wall Street Journal forecasts, Airbnb’s revenue will reach $10 billion — a more than ten-fold increase from 2015 revenue projections. “The bottom line,” D’Alessandro said, “is that Airbnb is a competitor for traditional hotels.”

And competition isn’t anything new for the lodging business. D’Alessandro points to the hotel industry’s ability to work with online travel agents like Priceline and Expedia as evidence that major brands can adjust to the evolution of travel. As hoteliers work to make those adjustments and navigate the new landscape of travel, what does it mean for meeting planners who are looking ahead to negotiating contracts and filling room blocks?

“No matter how you look at the future of convention housing, Airbnb is going to be a positive,” Durkin said. “It’s going to make hotel chains work even harder. They’ll have to look at how they’re attracting attendees and what they’re providing at their properties.”